Stock Exchange Merger Still Probable in Event of Brexit

A planned merger between the German and London stock exchanges would be essential in maintaining economic ties between Germany and the UK in the event of a Brexit, the head of the German exchange has said.

Although the merger was announced by the companies in mid-March, stockholders will vote on the deal after the referendum has taken place, to allow them to factor the result into their decision making.

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But speaking to The Telegraph, Carsten Kengeter, the ardently pro-European Union (EU) chief executive of Deutsche Boerse, has said that a Brexit wouldn’t damped the merger; to the contrary it may even enhance its role in forging cross-continental links.

“I want the UK to stay part of the EU, but if it’s not, the link we would provide between the Continent and the UK would be key,” he said.

Last week shareholders received a 1,000 page document outlining the planned merger, which include the likelihood of 1,250 jobs being lost across the two companies. But Mr. Kengeter said the deal would put the two exchanges on a more secure footing going forwards.

And he said that this attempt at a merger is going more smoothly than previous attempts.

“The previous attempts, one party or maybe both parties didn’t want to have that conversation. This time, it’s been cordial from the beginning,” he said.

“This sector is quite an idiosyncratic sector. It becomes quite difficult when the structure is based on an acquisition as it means one party is being overpowered. I don’t think that’s very healthy for stability. The merger concept allows all regulated entities to keep their existing regulator.”

Mr. Kengeter added that, despite some industry concerns over the clearing houses working closely together, the deal will give regulators comparable data on risks via both LCH.Clearnet in London and Eurex in Frankfurt.